while I do not think any system can successfully interpose uniformity as a block to progress, I do think we should all examine these proposed departures very carefully as to whether they are really progress or only differences that are not worth the price eventually to be paid.

We have frankly said to some individual railroad designers who have produced plans for rooms involving more and more use of revenue space, that if such accommodations are to be handled under Pullman tariffs those tariffs would be made to give price effect to substantial variations in the quantity of space applied. Your people have not seen fit to discuss with us the space allocations and other features of the accommodations to be supplied in the sleeping cars that are being built for your Company by the Budd Company. I do think there is warrant for mutual consideration of all those service factors, and we would welcome an opportunity to do what we can to the mutual advantage of all the interests concerned with these questions.

Yours very truly,

BUDD MANUFACTURING Co.

EXHIBIT No. 338

[Telegram]

NEW YORK, N. Y., July 22, 1936.

D. A. CRAWFORD,

President, The Pullman Co.

With no desire on our part to mar your well-deserved holiday, Mr. Whitney and I think you should know that we are very much worried about the fact that Williamson seems completely sold on Budd-built stainless steel cars for a new Century. Should he insist on following his present inclinations it would have a number of serious effects on the Pullman situation. Mr. Whitney is leaving August 3 for a holiday. Is there any chance we could get this letter threshed out before then? HENRY STURGIS.

EXHIBIT No. 339

2 WALL STREET, NEW YORK, July 17, 1936.

DEAR DAVE: Yesterday afternoon I spent a couple of hours with Fred Williamson and was very much disturbed to find that he is pretty well sold on stainless steel and the Budd Manufacturing Company welding. He volunteered the opinion that the Pullman Company ought to make an arrangement with Budd or we would soon find ourselves operating cars and out of the ownership.

Of course, I relialize that we in the Pullman Company are convinced that Williamson is wrong. On the other hand, if his judgment should lead the New York Central to use stainless steel for a new Century train, it seems to me it would be a terrible blow to the Pullman Company. It looks a little as though the competitive instincts of our railroad friends are again at work, and we are likely to wake up with a new Century, then a new Broadway, and then the B. & O. will have to do something, and thus it will make the round of the country. Perhaps the really wise thing to do would be to try to persuade the New York Central not to put on a new train.

Wilbur Wolfe sent me a copy of Mr. Sturgis's letter to you of July 17, on the subject of his talk with Mr. Williamson concerning lightweight cars for the

Century. While in New York day before yesterday, I went in to see Mr. Sturgis and told him what we have been doing with the New York Central on this question. I called on him after Mr. Hungerford and I had our meeting with the New York Central people, at which time the floor-plan arrangement for the new Century train was decided upon, and it was agreed that we would give them figures, as promptly as possible, on the weights of the cars, and Pullman-Standard would give them prices on the cars to be purchased by the Railroad. I told Mr. Sturgis that neither Mr. Hungerford nor I felt apprehensive that the New York Central was going to "fly the coop" and make up with the Budd Company so far as this service goes, but that it was a fact that Mr. Williamson has asked the Budd Company to submit a proposal.

We discussed the question of Pullman renting railroad-owned sleeping cars, and I told him we had made up our minds that we could not go any further with arrangements of this sort, but that I hardly thought we were going to be up against anything like this with the New York Central in connection with the Century. This seemed to somewhat diminish Mr. Sturgis's fears that the Budd Company might get a foothold on the Century, and I assured him that we were doing everything we could to work out our problems with Mr. Williamson and his New York Central people by offering them lightweight cars of our own design and construction.

Mr. Hungerford is, as soon as possible, going to submit to the New York Central people revised floor plan and consist of the train as decided upon day before yesterday, and is also contemplating making them a proposition to handle the complete meal service on the train. This will include owning and operating the dining-car facility, as well as the lounge-grill car, under some mileage or guarantee arrangement. I also suggested to him that floor plans and a train consist be made up for the Broadway Limited, as it is obvious that we will have to submit something to the Pennsylvania if we go ahead with the New York Central proposition.

Mr. Hungerford showed me your memorandum on the question of how new cars of this type might be handled under existing contracts, or under the draft of contract now before the New York Central and Pennsylvania. It seems to me, under the draft presented the New York Central and Pennsylvania, that we will have to put in Cor-Ten steel cars in the regular way and absorb 50% of the excess depreciation cost ourselves as long as there is divisible revenue, and cover the flaw in the equation that would otherwise result in us absorbing 100% of the excess depreciation when there is no divisible revenue, by a proviso that the Railroads, in such event, will pay us 50% of the excess depreciation.

During the evening over at the Yale Club, Mr. Hungerford and I ran into Mr. Williamson and had quite a chat with him. He stated that the Budd Company had already submitted a proposal on a 15-car train, but did not amplify the statement in any way. He asked us how much our train is going to cost, and we told him that Pullman-Standard Car Manufacturing Company will sumit prices on that part of the equipment to be bought by the Railroad and that we propose to own and operate the sleeping cars ourselves. He mentioned that he thought our figure of $31,000.00 per car, representing the average cost of existing equipment, which he said he understood was the figure subtracted from the actual cost to determine excess cost in the case of our supplemental contract with the Union Pacific, was too low, as he said he did not think we could build sleeping cars out of open-hearth steel for that figure under today's conditions. We told him that Cor-Ten steel cars, of the construction that we were offering for the Century, would probably not have to be handled in that way and that we could offer him some better arrangement to cover the new cars for the Century if the New York Central would accept the draft of contract that we now have before them.

However, in view of Mr. Williamson's apparent interest in the Budd development, I think it is important that we get in his hands, as soon as possible, our final proposition on the Century, and make up our minds what we are to say to them about contract arrangement to cover. It seems to me, at this juncture when Pullman is being asked to put new capital into the business in the way of new cars, that we should try to bring the contract matter to a conclusion with all the energy we have.

Mr. L. S. HUNGERFORD.

HALE HOLDEN, Jr.

EXHIBIT No. 341

AMENDED AIR AGREEMENT

day of

MEMORANDUM OF AGREEMENT made this 19, by and between RAILWAY EXPRESS AGENCY, INCORPORATED, a corporation created and existing under and by virtue of the laws of the State of Delaware, hereinafter called the "Express Company," and---

The parties to this Agreement realize that the development of air express cannot be accurately foreseen; that the service consists of two essential funetions-one transportation by airplane from airport to airport, the other picking up and receiving from the shipper, transporting to the originating airport, and transportation from the destination airport and delivery to consignee with full responsibility to shipper and consignee the first is performed by the Air Company and the latter by the Express Company and a complete coordination and blending of the two are essential to an efficient air express service. Each party has responsibility as to investment, personnel, and operation, which cannot be properly or effectively controlled or directed by the other. The purpose of the parties is to render a service to the public and to develop a mutually profitable and successful nation-wide air express service. Because of unforeseeable developments it has been found impossible to provide in this Agreement for all contingencies and with the foregoing in mind it is the firm intent of the parties to consult, confer, and cooperate to the fullest extent for the accomplishment of their joint purpose and they have, therefore, entered into the following Agreement: For and in consideration of the mutual covenants and payments hereinafter recited to be by the parties kept, performed, and made, the parties hereby agree as follows:

1. SERVICES

The Air Company agrees to maintain a regular and dependable service by aircraft between flying fields adjacent to and

Intermediate points on said routes will also be served, but the routes may be varied in respect to the intermediate points from time to time by the parties as the needs of the service and the flying conditions require, subject to the rules and regulations of the Post Office Department, Department of Commerce and any other governmental body having jurisdiction thereof. This Agreement shall also apply to extensions of the above described routes provided such extensions are operated under an air mail contract. It shall also apply to extensions into noncompetitive territory whether operated under air-mail contracts or not. This Agreement, however, is subject to the needs of the Government in time of war or other national emergency, mail loads, acts of God, strikes, storms, weather or other conditions beyond the Air Company's control.

The Express Company shall, subject to and in accordance with the terms hereof, furnish adequate personnel and suitable equipment for the promotion, solicitation, collection, acceptance, and delivery of parcels, packages, or other air express matter for transportation by airplane, and shall use its motor vehicles property, offices, and other facilities, and its agents and employees, in operating an air express transportation business as an independent contractor and not as an agent of the Air Company; and in the conduct of said business shall exert itself in all proper ways to make said business satisfactory to the public and to the Air Company.

It is contemplated that the Air Company and all air companies having similar agreements with the Express Company may establish various types of air express service based upon the time consumed in the transportation of express matter, such as expedited air express, freight or deferred express and other services which will permit the shipper to choose a particular type in accordance with his needs. The Express Company agrees that in exerting itself in all proper ways to make said business satisfactory, it will promote the sale of each and every type of service so adopted by the Air Company or the other air companies having similar agreements with the Express Company.

2. TITLE OF COMMENCEMENT OF SERVICE

The Air Company and the Express Company agree to commence the carriage of express on said routes on such date as may be mutually agreed upon, not later, however, than

-

3. EQUIPMENT

The Air Company agrees to supply and maintain a sufficient number of modern substantial aircraft in good and proper condition at all times to transport promptly all of the normal amount of express business procured by the Express Company, and a reserve supply sufficient to insure the minimum of delay in event of accident or failure of aircraft.

In the event that all the express offered for any particular schedule cannot be carried on that schedule, the remainder will be forwarded on the next available one. In the event, however, the next available schedule is uncertain on account of heavy movement of mail, accident, weather conditions or other unavoidable conditions, such excess express matter as can be delivered with equal promptness by another air company having a similar contract with the Express Company or by all rail express, or combination rail and air express, shall be promptly returned to the Express Company for such forwarding.

The employees of the Express Company used in collecting and delivering express matter as aforesaid, shall be equipped with motor vehicles of such type as to insure prompt and speedy collection and delivery of said express matter.

4. BUSINESS

The term "Express Business" shall be deemed to mean all traffic of whatsoever nature designated by the shipper for carriage by air and not considered by the parties hereto to be unsuitable or dangerous for cariage by air (excepting government mail, Air Company mail and materials, passengers and passengers' baggage), transported wholly by air between points on said routes. The Air Company agrees that during the time in which operations are earried on under this contract it will not accept express business, as described above or otherwise; from any party other than the Express Company; and the Express Company agrees to use the service of the Air Company in respect of all express business; as defined, subject, however, to the provisions of this and similar contracts with other air lines relating to the distribution of competitive traffie.

When the Express Company proposes to enter into an agreement with any other air line, providing for service similar to that provided for herein, between points within the forty-eight States of the Union, it shall promptly give the Air Compary notice thereof, and if such proposed agreement contains rates and terms mere favorable to such other air line than those hereby granted, the Air Company may require that this Agreement be supplemented and amended so as to give the Air Company like rates and terms effective upon the execution of such agreement with such other air line.

The Express Company agrees that in the event any other air line desires to enter into a contract with the Express Company; to handle air express which competes with the Air Company; the Express Company will not se contract with such competing air line unless the Air Company shall first give its written consent thereto or upon compliance with the following conditions:

Whenever the Express Company shall desire to make such contract with a competing air line in actual operation, it shall give Air Company written notice of its intention so to do, and Air Company shall thereupon have the opportunity; for and during the period of six months following the receipt of such notice, to provide & service comparable to or better than the service actually operated by such competing air line, and if Air Company shall se provide such service, within six months, or furnish evidence that it will estab lish such service within a period of six months after the expiration of said first six months, then in such event Express Company shall not make such contract with a competing air line but shall utilize the new service so to be provided by the Air Company:

It is, however, understood and agreed that nothing in this Agreement shall prevent the Express Company from contracting with other air lines for the transportation of express over routes for which such air lines may regularly receive payment for the transportation of the United States or Canada mail, or with any other air lines, their successors and assigns, over routes established and in operation on December 1, 1935:

The Air Company will state at the commencement of service the number and capacity of the aircraft allocated to such route and will increase or decrease said number as mutually agreed upon from time to time as the amount of business, in the opinion of the Air Company, justifies such increase or decrease, consistent with the best handling of air mail, air express, and passenger business.

5. SCHEDULES

The Air Company agrees to schedule the departure of its craft so as to attract the greatest volume of express business and to provide expeditiously and economically for the handling thereof, insofar only, however, as will not interfere with the Air Company's operations under its air-mail contracts and passenger business.

6. DELIVERY OF MATTER

The Express Company agrees to designate such of the offices and places of business of the Air Company as may be mutually agreed upon as offices of the Express Company, for the receipt and delivery of air express shipments, and to appoint such of the agents and employees of the Air Company as may be mutually agreed upon as agents of the Express Company for the purpose of handling such air express shipments.

All express matter for shipment by air shall be delivered by the Express Company at the Air Company's stations at the airports used by the Air Company and all express matter for delivery shall be received by the Express Company at the Air Company's stations at the airports used by the Air Company. The Air Company shall deliver to the representatives of connecting air companies, at points designated by such companies, express matter routed for carriage by the lines of such connecting companies: provided, however, that where such connecting air companies do not operate at the airport used by the Air Company, the Express Company shall transfer all express matter from the Air Company to the representatives of any such connecting air company at any such point.

The Air Company shall, at its own expense, load and properly stow on, and unload promptly upon arrival from, its aircraft, the express matter transported or to be transported by such aircraft. It shall also deliver, at the Air Company's usual place of business, at the airport, such express matter to the representatives of the Express Company for transportation by the Express Company from the airport. The Express Company, upon picking up or receiving express matter for transportation over the lines of the Air Company, shall promptly deliver such express matter to the Air Company's station at its designated airport for loading on the airplanes of the Air Company.

The Express Company shall perform the collection and delivery service for all air express shipments to and from airports and between connecting lines at different airports, with reasonable dispatch.

7. EMPLOYEES

The Air Company will employ as pilots, mechanicians, and other persons handling or having access to the express matter of the Express Company, only such men as are, in the opinion of the Air Company, capable, honest, and trustworthy, and will use its best efforts to procure faithful performance of their duties by such employees, and require such of them as may be mutually agreed upon to be bonded. All pilots while in charge of the express matter shall be adequately armed by the Air Company, and the Air Company shall otherwise take all reasonable precautions to safeguard the express matter.

The Express Company will employ, as employees handling or having access to the express matter of the Express Company, only such men as are, in the opinion of the Express Company, capable, honest, and trustworthy, and will use its best efforts to procure faithful performance of their duties by such employees and require such of them as may be mutually agreed upon to be bonded, and such employees shall be adequately armed by the Express Company, ard the Express Company shall otherwise take all reasonable precautions to safeguard the express matter.

8. RATES

(a) Air express rates to be assessed on traffic subiect to this Agreement shall be in accordance with the air express rate formula which became effective Angust 15, 1934, or on such other uniform basis as may hereafter be agreed upon by all the air companies having similar agreements with the Express Company but,